News
about financial markets is 24/7. Coverage of this or that stock price moving
up and down comes fast and hard. Earth’s orbit would appear to be dependent
on what the Federal Reserve Bank does or does not do to interest rates.

The inquiring minds of
investors want to know that, and more. Constantly, they search for a crystal
ball to tell them what tomorrow may bring for their investments. Such
knowledge is a precious thing to them, indeed.

What is assumed here needs
to be explained. Namely, why is it that investment capital flows into
financial markets in the first place? Why not invest in producing things
that people make/grow, sell, buy and use?

Apparently, profits are not
as likely with additional production as they are in financial speculation.
So investors buy bonds and stocks. On that note, much foreign capital flows
to U.S. borrowers, households and businesses.

Some foreign lenders like
the safety of such investments in the only world superpower. It is
militarily supreme. That power of force helps to make its currency, the
greenback, attractive—for now.

However, some investors
worry about how long that attraction will continue.

In the June 17 Financial
Times, a top bond manager fretted "The U.S. dollar is being supported by the
kindness of strangers -- Japan and China.” What will happen to the bubbly
value of the U.S. currency if/when that support weakens?

Where would this investment
capital go if not to the U.S.? What unseen effects could be set into motion
from such changes in global investment?

The business press can
speculate, having mainly missed the meltdown of the dot.com bubble, among
others.

And radicals? Some of them
have correctly forecast one of the past 10 financial crises. But don’t
dismiss radical analyses of the market quite yet.

Go to the root of the
matter and try this thought experiment. Ask yourself a question that does
not get posed by those who dominate the investment debate in news outlets
such as The Financial Times. Who has created the surplus capital being lent
by a few and spent by many?

The surplus comes from
working people around the world. In one case, U.S. borrowers are spending
the surplus created by Japanese and Chinese workers.

The market tends to hide
the origin of the surplus—interest, profit and rent.

Firms and workers pay for
the privilege of borrowing money. This claim on their future income takes
the price form of interest. The names of the financial institutions involved
may and do change like the weather, but relations between creditors and
debtors remain uneven.

Crucially, private-sector
workers create profits for their employers in high- and low-income nations.
This is done legally, according to the letter of the law. The Iraqi people
will be getting more of this thing called market democracy with the
“handover of sovereignty” to them from the U.S. government, effective July
1.

As regards rent, it is
income earned by landlords from their tenants. For workers, rent payments
come from wages earned on the job. Wages are the price form of the value
that employees create for private-sector employers from Argentina to Russia
and throughout the “land of the free.”

Significantly, those who
produce the surplus capital do not own it. The direct producers are
basically surplus-less. Call them the working majority, in no way
overlooking the many national differences in the global economy.

On the surface, some
foreign lenders appear as kind strangers to U.S. debtors. Yet the underlying
reality points to a much different set of social relations. Meanwhile, the
Bush administration wages a war on some terrorists to expand market
democracy, itself the engine for surplus capital.

Seth Sandronsky is a member of Peace Action and co-editor with
Because People Matter, Sacramento’s progressive paper. He can be reached at:
ssandron@hotmail.com.